Demand for serviced and flexible office space has grown significantly in the last 2 – 3 years. So much so the global market has tripled in size over the last 10 years and is now worth approximately $16bn globally. In Dublin, 20% of the office take up for this year has been acquired by Serviced Office Providers such as WeWork, Regus, Glandore and Iconic Offices and there is no end in sight for this upward trajectory.
No longer just tech companies turning to flexible space
While employee wellness might have been the preserve of start-ups and SMEs in the past, this is no longer the case and multinational corporations such as Facebook and Amazon are now leading the way in the use of flexible, comfortable workspaces and work stations for employees around the world.
A common misconception is that this type of office structure is just for technology operations. While it’s true that in Ireland tech companies account for approximately 50% of the flexible office market – the tide is turning. We are experiencing a significant increase in demand for space from legal, financial and pharmaceutical organisations who are following in the footsteps of their tech counterparts. What is becoming clear is that management across all industries and sectors are appreciating the need for workspace flexibility, and the need to ensure that correct structures are in place to support employees and provide them with a productive and adaptive working environment.
So too, the standards demanded by employees of their work environment continue to increase. As a result, yoga studios, gaming rooms and break out spaces are not uncommon as employers work to facilitate employee cohesion and wellbeing to greater extents. Such collaborative spaces also work to take away the focus from a traditional enclosed meeting room and facilitate staff to ‘bounce’ ideas off one another in a more open environment.
Co-working environments offer a similar solution for “lone workers”, where individuals or companies can work together. Employees can rotate around an office floor daily (“hot-desking”) and meet and network with other colleagues from their own, or other organisations.
Creating more than just office space
The creative side of the workspace plays a vital role in the popularity of some serviced office providers. The likes of WeWork, Huckletree and Iconic Offices in Dublin are testament to this – these providers offer their members access to networking events and speaking engagements. Iconic Offices are soon to open a cinema room at their St Stephen’s Green location.
These providers are known for their extravagant spaces in the serviced office market with the design and fit out used to reflect their values in the workplace with ‘creativity sparking creativity’.
As demand in Dublin for serviced office space has doubled in the last few years, the market has become increasingly competitive – good news for employers and employees alike as it makes the costs associated more affordable for all. Newcomer to the market Spaces opened its first centre in Dublin in July this year and WeWork recently announced they will be taking over space in the former Central Bank building on Dame St, as well as opening up another of their recent acquirements, 2 Dublin Landings, later this year. Iconic Offices are also looking to open another site in Dublin 8 in 2019 and looking to expand into other regions too.
Growing popularity of flexible space outside of Dublin
Another appeal of the flexible office space over a conventional office lease is that it allows companies to ‘test the water’ before taking the final leap and opening their own office, something UK companies are seeing the benefit of with Brexit around the corner.
Serviced offices are not just restricted to Dublin. There is an increased demand regionally with one of Dublin’s largest serviced office provider’s, Glandore, recently acquiring space in Cork (due to open in Q4 of this year) on the back of calls for this type of workspace to be more readily available around the country.
We will see an even greater demand for shorter term leases over traditional long-term arrangements with the International Accounting Standards Board (IASB) introduction of IFRS 16 in January 2019. IFRS 16 is being introduced to increase financial transparency on a company’s balance sheet, which means that everything will need to be listed for any leases over 12 months (so considered long term). Any leases over 12 months must list all other lease contracts and in turn the all-inclusive flexible office solution offers shorter leases from 3 months to 12 months. Potentially another reason we’re seeing large multinationals taking up space with serviced office providers rather than signing up for a longer-term lease in their own office spaces.